This is very different when you work for yourself. You have a billable rate, but you have overhead costs, and you likely do not collect the same amount of money that you bill. Let me introduce you to Attorney Andrew, admitted to the Oregon State Bar in 2005. Andrew has a billable rate of $200 an hour. He spends six hours working on the Client Carlton matter. He knows he really should have been able to do the work in four hours so he writes the Client Carlton bill down to four hours, $800. Client Carlton is billed $800 and pays $800. There are 10 additional clients billed during the same month totaling $8,400 and is paid only $6,600.

Attorney Andrew’s total gross income is $7,400 for the month. His proportionate expenses are $1,538.09. Attorney Andrew’s net income would be $5,561.91.Will he take the full amount as take home income? Or will he buy more paper and ink for his printer? Or should he save the money as a cushion against any future expenses.

What are Attorney Andrew’s numbers looking like? Attorney Andrew wrote down $200 on the Client Carlton time charges. What amount of time did he write down on the other client matters? If he billed $9,180 but only collected $7,400 then his collection rate for this month was 81%. $7,400 divided by $9,180 = 81%. COLLECTION RATE EQUALS THE AMOUNT RECEIVED DIVIDED BY THE AMOUNT BILLED.

But if his time charges entered for the entire month were 60 hours (value = $12,000) and he wrote off 14.10 hours and only billed 45.90 hours (value $9,180), then at his $200 billable rate he was only paid for 37 hours ($7,400). As a result, his realization rate is on 62%. $7,400 divided by $12,000 = 62%. REALIZATION RATE EQUALS THE AMOUNT RECEIVED DIVIDED BY THE VALUE OF TIME RECORDED.

If you haven’t run screaming from being in front of this blog post, take a look at Attorney Andrew’s net income of $5,561.91. We realize there are other monthly overhead costs besides rent, and 1/12 of the annual OSB bar membership dues and PLF assessment for malpractice insurance coverage. You can do your own precise calculations with all your numbers. If I told you that Attorney Andrew was somewhat prudent and only paid himself $5,000 gross salary a month, then his gross annual salary is $60,000. Based on 52 week in year, 40 hour work week, Attorney Andrew’s gross hourly rate of pay is $28.85. Considering how proud Attorney Andrew is to have a billable rate of $200 an hour, that gross hourly rate of pay is something else isn’t it? Well, though painful, it isn’t accurate: don’t forget federal and state taxes and other withholding amounts for social security and medicare that Attorney Andrew must pay. His net pay is not $28.85. It’s less…

For the sake of our sanity, let’s just run with this $28.85 an hour gross hourly rate of pay. Attorney Andrew wants to purchase a new leather sofa long enough to nap on, delivered to his condo from Pottery Barn, he will spend $3,499. Not bad! He better like it because it will take him 121.29 hours to earn the price of that leather sofa based on his $28.85 gross hourly rate. And we won’t talk about the dream car Attorney Andrew is dreaming of buying. It is pretty cool looking for a car. Okay, I’ll tell you what his dream car is so you can google it and share the dream: the 2016 BMW i8 with a MSRP of $140,700. If Attorney Andrew had a savings account to clean out, it would take 4,876.95 hours based on his $28.85 gross hourly rate to put that baby in his garage. I wonder what his condo cost if it has a garage. Hmm…

So the moral of this story of Attorney Andrew is multi-layered.

Don’t get overly impressed that your billable rate is $200 an hour.

Look at your collectible rate.

Look at your realization rate.

Before falling in love with new furniture and cars, calculate how many hours you will have to work to pay for them.

Before getting more clients, look at how efficiently you are serving the clients you already have.

Some lessons are so important, they bear repeating. For years the Practice Management Advisors at the PLF and through out the USA and Canada have cautioned lawyers about scrubbing metadata from documents.

“…Much hype has surrounded metadata ever since the March 4, 2004, CNET News.com disclosure that SCO Group’s lawsuit against defendant DaimlerChrysler for alleged violation of their Unix software agreement was initially prepped as a lawsuit against Bank of America for copyright infringement. You may have enjoyed the benefit of using a suite of programs like Microsoft Office, especially because it is easy to pull data from one program into another, such as copying part of an Excel worksheet into a Word document. However, if you do this from the Edit menu using the “Paste Special” feature and selecting “Microsoft Excel Worksheet Object,” you may be in for a surprise. Double-click on the Excel worksheet object in your Word document and you’ll discover that the entire worksheet document is visible, including other worksheet tabs that may contain sensitive information. The entire Excel worksheet is known as an embedded object and is metadata that travels with the Word document. Thus, the full Excel worksheet can be viewed by the receiver of the Word document, even though you didn’t intend that result. The detriment of exposing more that a select portion of an Excel spreadsheet may be exponential if the additional figures pertain to your negotiation strategy on settlement offers or disclose profit projections for complex financing plans.

In complying with discovery requests, you are required to provide only the documents and data set out in the discovery demand. Beware — if supplying electronic versions of your documents — that you are not providing more information than required by inadvertent disclosures in document metadata.”

“The ABA opinion stands as an important reminder that it behooves lawyers to learn and understand technological advances that are integral to their practice so that they do not inadvertently send information that they might later wish they had not.”

“Two rules inform a lawyer’s duties when sending documents electronically. Oregon RPC 1.1 requires a lawyer to provide competent representation to a client, meaning the lawyer must possess the “legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation.” In addition, RPC 1.6(a) requires a lawyer to “not reveal information relating to the representation of a client.” “Information relating to the representation” is a defined phrase under RPC 1.0(f) and includes both information that is subject to the attorney-client privilege and other information gained during the course of the representation that the client has asked be kept secret or the disclosure of which would be embarrassing or likely to be detrimental to the client. With these two rules as a backdrop, the OSB Legal Ethics Committee concludes that competency in relation to metadata requires a lawyer who uses electronic communications to maintain at least a basic understanding of the technology and the risks of revealing metadata or to use adequate technology support. OSB Formal Op. No. 2011-187.”

“How to Remove Visible Data or Do Redaction from PDF Files in Four Easy Steps:

This can be done in Acrobat XI Pro only.

1. In Acrobat XI, choose Tools > Protection.

2. Click Mark for Redaction.

3. Go through your PDF and highlight the text or images you want to redact.

4. Click Apply Redactions. Acrobat permanently deletes the selected information from the file, replacing it with black blocks or other formatting of your choice.”

Why all the concern? Lawyers are continuing to trip when they should be treading carefully, as stressed in this Law360 post: E-Filing Error Can Destroy Trade Secret Status that you can read in its entirety with a free 7-day subscription.

“First rule of thumb in trade secrets litigation? A trade secret must be kept secret. It is painfully obvious, but modern practitioners must not grow complacent due to the convenience of electronic filing. Although trade secrets law does not command absolute secrecy, a recent e-filing snafu in HMS Holdings Corp. v. Arendt offers a cautionary tale from New York on how one botched upload could jeopardize a client’s most prized possession.”

[8] “To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology, engage in continuing study and education and comply with all continuing legal education requirements to which the lawyer is subject.”

Lawyers have a duty of competence. If you aren’t competent, then you are supposed to get competent or associate with someone who is competent. You may find yourself in a situation where neither seems to be an option. I talked with a lawyer who was relatively young in law practice experience and did not have the level of experience, knowledge, or adequate capital to handle a medical malpractice case. A pro bono one! Happily, the lawyer was able to say no and get the case off to someone with the current skills and resources to help.

Lawyers have a duty to communicate with their clients. Sometimes, what needs to be communicated isn’t good news, such as communicating that upon review you have discovered that the case has no merit and not a chance of prevailing at court. One lawyer found this out after saying yes and engaging in a lot of puffery about being able to get the client money. Understandably, the lawyer was reluctant to say, no. No case. No ethical way to pursue this. That was a hard no. Likely, the lawyer toned down enthusiasm with the next potential case until investigating the facts revealed worth pursuing.

Lawyers have a duty to safeguard client property. Some clients push for their check to be cut now. But if the funds for the client are not actually in the trust account, because the issuing bank of the check has not transmitted funds to the Lawyer Trust Account, then there are no client funds to be disbursed yet. You otherwise are robbing Peter to pay Paul. Best to say, no, the funds are not yet available and they will be disbursed to the client just as soon as they are available.

Lawyers have a duty to not take on a case, or if engaged to withdraw from representing a client, if the lawyer’s physical or mental condition materially impairs the lawyer’s ability to represent the client. What if the lawyer has represented the client for a long time and the client wants the lawyer to continue to finish up the matter? What if the lawyer cannot see or even concentrate because of the pain of treatment for terminal cancer? What if the lawyer has been admitted to a drug and alcohol treatment facility for detoxing or in a lock down for mental illness? The client may want the lawyer to continue but if the lawyer’s physical or mental condition render the lawyer incapacitated, then the lawyer must say no, not now. Hopefully the lawyer’s cell phone has been collected at the hospital door, but I have heard of clients calling and calling and calling, despite being told that the law office is temporarily closed.

What about those clients who are friends? How easy it is to get into a situation where you continue to do legal work for free because it is your friend. Some lawyers get themselves too busy helping friends, and friends of friends, with myriad legal matters that are beyond the lawyer’s ability to properly attend to with the competence and diligence required. You don’t get a pass on ethics violations or acts of malpractice just because it is a friend who is not paying for legal services. You undertake providing legal services, you need to provide the services ethically and without committing malpractice.

Comment 5 to ABA Model Rule 1.4 (Communication) states “…The guiding principle is that the lawyer should fulfill reasonable client expectations for information consistent with the duty to act in the client’s best interests, and the client’s overall requirements as to the character of representation.” Make sure your clients are being given reasonable expectations. Hold the client’s best interest foremost in mind and you will do the right thing, even if the right thing is to say, “no.”

Here are some of the issues you need to consider before acting: you have a duty to your clients to communicate. Oregon RPC 1.4 Communication (a) A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information. (b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation. The fact that you will be leaving the firm impacts your clients. They came to you for help in solving a legal problem. No matter your personal feelings of disenchantment with your firm, do not drag your clients into the middle of any conflicts.

Here are some frequent questions that cause anxiety:

“When can I ethically tell my clients I am planning to leave?” The common sense answer: “Tell your clients after you tell your firm.” That’s right, after. You get this one wrong and your relationship with your present firm is damaged. If you are a partner, you have a duty to your fellow partners and to the firm. If you are an associate, you have a contractual relationship with your employer.

“When do you need to tell your firm you are planning to leave?” If you are a partner, look to your partnership agreement. Remember you are withdrawing from the partnership. If you are an associate, look to your employment contract or personnel manual.

“What if my firm does not have anything in writing?” If there is nothing in writing to guide you, most professionals provide at least 30 days notice if not 60 days notice. You don’t want to damage your firm, merely move on. If you are in a general partnership, see the Oregon Revised Partnership Act, ORS 67 for governing provisions. If you are in a Limited Liability Partnership, LLP, see the Uniform Limited Partnership Act, ORS 70 for governing provisions.

“What about getting information for my conflicts of interest database?” If you have billed on a client matter, you have knowledge of client information that means a potential conflict of interest going forward.Some firms supply year-end and month-end reports of your billing matters. If not, you will want to ask your firm for this information.

“What about when I tell my firm about my plans?” Take the time to plan how this event will take place. Preparing an annotated status report of client maters you are responsible for or have been working on is important and appreciated. Additionally, you may want to have a packet of materials with you when you notify your firm: client status report, proposed letter to clients, copy of article addressing ethical guidelines, proposed timeline of your exit and transition of remaining clients to another attorney in the firm. Be sure to make a copy for yourself which will be important if the firm tells you to leave immediately or by the end of the day or week.

“What about forms and sample documents I’ve used or even created while at the firm?” Consult a lawyer about this. Generally speaking, if something was created during your employment by a firm, it belongs to the firm. Most firms have monitoring provisions in place, or the ability to do so. Your efforts to download documents from your firm’s server is not under the radar. There are records of this and there may be consequences if you help yourself to property of the firm with the intention of converting it to your own use at your next firm. You wouldn’t dream of collecting office supplies. Consider that the firm’s form bank is far more valuable than post-it notes and paper clips!

Finally, to ensure that you are going to exit your firm ethically and gracefully, consider seeking ethics advice from the Oregon State Bar Ethic Counsel or hire outside ethics counsel to guide you through your situation. Whether you are a partner or an associate, you are an Oregon attorney-at-law, a professional. Conduct yourself accordingly. Good luck in your future endeavor.